The Department of Labor’s hearings this week on the proposals to reduce conflicts of interest in the retirement advice marketplace could be a defining moment for the financial-services industry.

Or, against the backdrop of the 2016 presidential election and the possibility of a Republican taking over the Oval Office, the hearings could prove interesting but not definitive over the long run.

Regardless, the retirement landscape has changed significantly since the Employee Retirement Income Security Act (ERISA) became law in 1974. A time when individuals could rely on a combination of Social Security benefits, income from a traditional defined benefit plan funded and managed by employers, and personal savings and investments for retirement. Amidst today’s retirement crisis, Americans must be responsible for saving and investing for retirement which is often difficult as this is a complex issue that requires expert guidance and advice from financial professionals.

Most industry professionals agree with the Department of Labor that all retirement-industry participants should act in the best interest of investors; however, this is where the common ground ends for many.

The Issues with the Proposed Rule Change

The proposed rule expands the definition of fiduciary to include, anyone that receives compensation for providing individualized investment advice, or recommendations with regards to a retirement investment decision under ERISA and the federal tax code, regardless of his or her official title, with some carve outs. The new rule would expand the fiduciary liability to more retirement industry service providers and could affect how they are compensated going forward.

Furthermore, implementing a rule change will likely add a layer of regulation, and perhaps confusion, to an industry many argue already is subject to sufficient or even burdensome oversight.

For example, between the SEC, FINRA, and the proposed DOL rule, multiple sets of rules could apply to any retirement product, creating a more complex landscape for advisors to navigate.

White House Agenda

The Obama administration is concerned that conflicts of interest affect investment advisors’ behavior and that advisors often act opportunistically, to the detriment of their clients, because they receive commissions from product providers. A report prepared by President Obama’s Council of Economic Advisors found that “an investor receiving conflicted advice who expects to retire in 30 years loses at least 5 to 10 percent of his or her potential retirement savings due to conflicts, or approximately 1 to 3 years worth of withdrawals during retirement” and that potential investor losses could be as high as $8 to $17 billion per year.

The Rule, not the Exception

In the face of such shocking numbers, it’s easy to lose sight of the fact that most financial advisors offer advice consistent with the interests of their clients.

In fact, such behavior is more the rule than the exception. Most financial advisors, like their clients, are in it for the long term and want to build lasting relationships. Offering investment recommendations that deliver subpar performance is unlikely to help them meet this goal.

Also, the vast majority of American retirement savers have relatively little understanding of financial markets and investing strategies. However, most retirement plans today require a high level of participant engagement with complex financial information. Consequently, most retirement investors will benefit from helpful investment advice and thorough financial planning.

While the Department of Labor’s broad efforts to protect investors are admirable, the complexities of its fiduciary proposal will likely make new regulations challenging for retirement investors and advisors alike.

Terry Dunne is Senior Vice President and Managing Director of Rollover Solutions Group at Millennium Trust Company. Mr. Dunne has over 35 years of experience in the financial services industry.